Litigation _ Lawsuits by langkunxg

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									Litigation & Lawsuits
Thresholds, Truth about the Process, Costs and Expectations



January 2013




*Note: This White Paper is a prelude to a Webinar that will be hosted by Brown & Jo-
seph and presented through NAWLA in mid-January, 2013.
Introduction




T
          his white paper will provide a high level
          overview of the legal process. Every case
          can be different with its own level of com-
plexity, time frames, procedures and costs. The legal
process and filing of a lawsuit is not an easy quick-
fix that magically brings money to your bottom line
in a short time frame. On the contrary, it is a time
consuming effort that can be complicated, frustrat-
ing and costly; forms, procedures, costs, discoveries,
interrogatories, witnesses, trial (bench/jury) con-
tinuances, etc., etc.

The main factors to consider include:
 • Thresholds & Costs                                           Brown & Joseph is an international Law
 • Legal Process                                                Office Collection Firm offering innovative
 • Time, Emotional Cost & Uncertainty                           accounts receivable solutions in the com-
                                                                mercial B2B sector.

Thresholds & Costs                                              We specialize in the Lumber Wholesale,
                                                                Manufacturing and Building Materials
The first factor when considering if a lawsuit is a             Industries. Brown & Joseph is a proud
viable option, is the size of the debt. In the past,            Affiliate Member of NAWLA and we are
due to lower costs, it made sense to file a lawsuit if          a Recommended and Preferred Service
the debt was over $2,500. Filing fees were no more              Provider.
than $150 in most states. Back out attorney fees
of $833(33.3%) and you would net roughly $1550.
That was considered a good business decision.

Needless to say, times have changed. The status of          These costs must be factored in when determining
the current economy has affected the legal arena as         if you want to file a lawsuit. Because of the costs
well. All states need additional revenue. Filing fees       involved, the average threshold for filing a lawsuit is
can be as high as $750 (higher in Federal Court).           now $5,000 - $7,500 usually depending travel and
Contingent attorney fees are still 33.3%, but there         potential witness costs.
are many attorneys’ that also charge a non-contin-
gent fee, or, hourly rate to cover their time and costs.
In addition there are court costs separate from filing      Legal Process
fees that vary as well as additional hourly costs for
counterclaims and depositions.                              Once the decision is made to file a lawsuit there are
                                                            things that occur that are common to all jurisdic-
Lawsuits are filed in the locale, or jurisdiction, of the   tions, however, there are also things that occur that
debtor. At the trial you will need to provide a wit-        could be specific to a certain state. Time does not
ness which adds to the cost: travel expenses, hotels,       permit covering all the variances, so, this whitepa-
etc.                                                        per provides a generic, simplified overview to gain a
                                                            greater understanding of the overall process.



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                                                           at trial, the plaintiff is awarded a ‘default’ or ‘sum-
                                                           mary’ judgment which means the court says that the
                                                           money is owed.


                                                           Discovery - assuming that the defendant answered
                                                           and a trial date has been set, both parties have the
                                                           right to determine, or ‘discover’ the evidence sup-
                                                           porting both sided of the dispute. This discovery
                                                           could be done in person, called a ‘deposition’, which
                                                           is recorded by a court reporter, or, through written
                                                           questions, which must be answered in writing, under
                                                           oath called and ‘interrogatory’.

                                                           Once discovery is complete, a trial date is set. The
A complaint is a written document prepared by              case will be heard by a judge unless a jury trial is
the attorney which sets forth the basic controversy        requested. Presently, the courts are so overcrowded
of the case and what relief is being asked from the        that if a jury trial is requested, in some jurisdictions
court to grant - a judgment that the defendant             it can take 3 – 5 years to obtain a trial date!
(party bringing the action) owes the plaintiff Party
being sued) money.                                         Regardless, once a trial date is set, written requests
                                                           to the court called ‘motions’ can be presented. Ex-
The complaint is filed with the court and a sum-           amples:
mons is issued. The summons states that the defen-
dant is being sued for money owed and directs the          • Motion to Dismiss – statute of limitations has
defendant to file an answer. The summons is typi-          expired, no jurisdiction
cally given to the sheriff in the debtor’s jurisdiction
to be presented to the defendant. If not delivered         • Motion to Show Cause – to gain a hearing to hear
after 30 days a special process server is engaged, at      reasons
additional cost, at which time, hopefully soon, the
defendant is served.                                       • Motion to Amend – request to change a part of
                                                           the lawsuit
Once served, the defendant is asked to file a re-
sponse to the complaint with the court. The answer         Once the case has been presented and heard by the
can be complex, or simply a denial that the money is       judge or jury, a decision is rendered in favor of one
owed. Regardless, there are statutory timeframes to        of the parties (plaintiff or defendant). If the plain-
answer the complaint which can vary from jurisdic-         tiff is entitled to relief or payment the terms and
tion to jurisdiction. The timeframe to answer is           conditions will be determined in post-judgment
from when the defendant is served, not from when           proceedings.
the lawsuit was filed.

Two things can now happen. One is that the de-
fendant answers within the timeframe, a trial date is
set, both parties appear at trial and the case is heard.
The other is that if the defendant fails to file within
the required time, or, answers and fails to appear



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Time, Emotional Cost, Uncertainty                        Another alternative is to avoid the lawsuit altogeth-
                                                         er………….
The Legal Process outlined the best case scenario.
There are many things that can happen that extend
the time and contribute to the emotional cost and        Why Avoid A Lawsuit
uncertainty when filing a lawsuit. To illuminate this
point, below are several (certainly not all) that are    Now that there is a greater understanding of the
common:                                                  process and ‘big picture’, it needs to be noted that
                                                         we highly recommend that whenever possible, avoid
• Delay of Service – the sheriff cannot serve the        a lawsuit. We consider a lawsuit to be the least at-
defendant. Special Process servers are engaged,          tractive option to be used only when all other efforts
can’t locate the defendant or the defendant dodges       have failed. Once an account is placed with Brown
service                                                  & Joseph, we go to great lengths to gather the Busi-
                                                         ness Intelligence needed to exhaust all possibilities.
• Counterclaim – the defendant’s response to             The credit and asset research we perform allows us
the plaintiffs allegations state claim(s) against the    to determine the paying ability of the debtor; can
defendant                                                the debtor borrow money to pay, can the debtor
                                                         honor a payment schedule, does the debtor have
• Continuance(s) – at the trial, the defendant           assets, or, is a settlement today the most reasonable
can ask for additional time due to circumstances         course of action. In many cases, a settlement today
that happen that can or can’t be controlled; illness,    is a better business decision than an unknown out-
weather, etc.                                            come in court a year or more in the future.

If you have expended the time and resources to at-
tend a trial out of state as a witness and the judge     Additional information can be obtained by contact-
grants a continuance, you have to either return at       ing Brown & Joseph.
the time the judge schedules which certainly adds to
the cost, or, drop the lawsuit.

Contributing to the uncertainty and frustration is
that just because you filed the lawsuit does not mean
that the verdict or decision will be rendered in your    Contact:
favor.
                                                         John Whyte
                                                         Vice President Business Development
Conclusion
                                                         Brown & Joseph, Ltd.
The filing of a lawsuit is an unfortunate, but, neces-   2550 West Golf Road Suite 300
sary part of business. However, many jurisdictions       Rolling Meadows, IL 60008
are looking at alternative dispute resolution solu-
tions in an effort to both unclog the overcrowded        Toll Free: 888-829-9997
court systems and speed up the process. Some states      Direct: 847-621-6122
require court ordered mediation and/or arbitration       Email: jwhyte@brownandjoseph.com
hoping that the dispute is resolved, thus avoiding
the time and costs of a lawsuit.                         www.brownandjoseph.com




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